ECONOMICS
SCARCITY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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how producers of goods and services react to price changes
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how consumers of goods and services react to price changes
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The stretchiness of a rubber band
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how often the price of a good or service changes when quantity demanded changes
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Detailed explanation-1: -Price elasticity refers to the extent to which changes in price affect the demand for a product. In other words, it measures the responsiveness of consumers to changes in the price of a product. If a product is price elastic, a small change in price will result in a large change in the demand for that product.
Detailed explanation-2: -Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. It is computed as the percentage change in quantity demanded-or supplied-divided by the percentage change in price.
Detailed explanation-3: -If a price change for a product causes a substantial change in either its supply or its demand, it is considered elastic. Generally, it means that there are acceptable substitutes for the product.
Detailed explanation-4: -Elasticity of demand is an important variation on the concept of demand. Demand can be classified as elastic, inelastic or unitary. An elastic demand is one in which the change in quantity demanded due to a change in price is large.
Detailed explanation-5: -A good that has a high demand elasticity for an economic variable means that consumer demand for that good is more responsive to changes in the variable. Conversely, a good with low demand elasticity means that regardless of changes in an economic variable, consumers don’t adjust their spending patterns.